Rental Housing Inspection Programs A Perspective From the Indiana Association of Cities and Towns Interim Committee on Economic Development September 25, 2013

Clarification Municipalities do not regulate residential leases, they regulate minimum property maintenance standards through rental housing inspection/registration programs.

Overview We have identified 16 Indiana municipalities that have some type of rental housing inspection/registration program. You will hear from some of these cities and towns today. Due to the after math of the mortgage foreclosure crisis and the increase in abandoned homes within cities and towns, there are a handful of municipalities that see the need to start a rental housing inspection/registration program. You will hear examples today.

Overview As of February 28, 2013, HEA 1313 – 2013 prevents local units of government from adopting an ordinance, rule or enactment that:         (1) Requires an owner or landlord to be licensed or to obtain a permit from the political subdivision to lease a rental unit.         (2) Requires an owner or landlord to enroll or participate in a class or government program as a condition for leasing a rental unit.         (3) Imposes or increases a fee or other assessment for any of the following:             (A) Inspection of a rental unit.             (B) Registration of an owner, landlord, or rental unit.             (C) Any other purpose related to the purposes listed in subsection (a). [landlord and tenant relations, rental agreements, real property subject to a rental agreement]

Program Characteristics 1) Required registration / periodic mandatory inspection. 2) Required registration/inspection based on complaints. 3) Most charge fees to provide for their program.

History In 2011, the General Assembly passed HEA 1543 which requires a political subdivision to maintain the fees collected from a rental housing inspection/registration program in a special non-reverting fund dedicated solely to reimbursing the costs reasonably related to services actually performed by the political subdivision that justified the imposition and amount of the fee. Separation of the funds demonstrate that most programs are not self-sustaining and must be subsidized by other dollars.

Three Reasons as to Why Rental Housing Inspection/Registration Programs are Critical to Communities

1. Economic Development Having quality neighborhoods adds to quality of life. Property values increase for all properties which adds tax base and lowers tax rates. Businesses want to locate in healthy vibrant communities.

2. Public Safety Deters irresponsible landlords from engaging in deferred maintenance and lax property management. Fires are prevented. Lives and properties are saved. Police runs are minimized. Overall crime is reduced. Less burden on public safety which saves money and keeps taxes low.

3. Government Efficiency Permits municipalities to identify, track and then prioritize the most dangerous problem properties. Registration provides municipalities with contact information for owners/property managers in the case of emergencies, code issues or other problems. Enables municipalities to identify code issues before they become cost prohibitive to repair. Cost to demolish the average residential property is $2,000-8,000.